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In the early years of jet development, during WWII, it became clear that the jet's fuel efficiency was well below that of the reciprocating engine. The low continuous temperature tolerated by the combustion chambers, under 1200°K, was to blame. Piston engines tolerate a peak combustion temperature of some 4800°K, because this high temperature is sustained only for one or two milliseconds. The thermodynamic efficiency of an ideal engine is given simply by 100(1-Te/Tp) in percent, where Te is the exhaust temperature in Kelvin, and Tp is the peak combustion temperature. Thus, a jet could easily triple its fuel efficiency by using a diesel engine to inject the kerosene fuel and combust the fuel/air mixture. The best gasoline fuel (130 avgas) at the time was unsuitable as it tolerated a maximum compression ratio of about 10:1, whereas ordinary diesel engines could attain 18:1, and 22:1 with Ricardo indirect combustion chambers.

In 1945 the Air Ministry asked for proposals for a new 6,000 horsepower (4,500 kW) class engine with good fuel economy. Curtiss-Wright was designing an engine of this sort of power known as the turbo-compound engine, but Sir Harry Ricardo, one of Britain's great engine designers, suggested that the most economical combination would be a similar design using a diesel two-stroke in place of the Curtiss's petrol engine.

Before World War II Napier had licensed the Junkers Jumo 204 diesel design to set up production in the UK as the Napier Culverin, but the onset of the war made the Sabre all-important and work on the Culverin was stopped. In response to the Air Ministry's 1945 requirements Napier dusted off this work, combining two enlarged Culverins into an H-block similar to the Sabre, resulting in a 75 litre design. Markets for an engine of this size seemed limited, however, so instead they reverted to the original Sabre-like horizontally opposed 12 cylinder design, and the result was the Nomad.

The objective of the design was to produce a civilian power plant with far superior fuel efficiency to the emerging jet engine. Thermal efficiency is given by 1-(Tx/Tp), where Tx is the exhaust temperature (any absolute scale) and Tp is the peak combustion temperature. Jet engines have relatively low-temperature combustion systems which produce a Tp of no more than about 1000 kelvin, much less than the typical 5000 kelvin of a reciprocating engine, and so jets have very poor thermal efficiency. The Nomad design focused on replacing the low temperature combustion chambers of the jet engine with highly efficient Diesel combustion chambers. In practice, it was much too difficult to couple the Diesel power output back into the turbine cycle. The maximum practical power of the Nomad was 4,000 horsepower (3,000 kW), and it was much heavier than a pure jet of the same power.

The Napier Nomad was a British diesel aircraft engine designed and built by Napier & Son in 1949. They combined a piston engine with a turbine to recover energy from the exhaust and thereby improve fuel economy. Two versions were tested, the complex Nomad I which used two propellers, each driven by the mechanically independent stages, and the Nomad II, using the turbo-compound principle, coupled the two parts to drive a single propeller. The Nomad II had the lowest specific fuel consumption figures seen up to that time.

The initial Nomad design (E.125) or Nomad 3 was almost two engines in one. One was a turbo-supercharged two-stroke diesel, having some resemblance to half of a Napier Sabre. Mounted below this were the rotating parts of a turboprop engine, based on the Naiad design, the output of which drove the front propeller of a contra-rotating pair. To achieve higher boost, the crankshaft drove a centrifugal supercharger, which also provided the scavenging needed for starting the engine from rest. During take-off additional fuel was injected into the rear turbine stage for more power, and turned off once the aircraft was cruising.

The compressor and turbine assemblies of the Nomad were tested during 1948, and the complete unit was run in October 1949. The prototype was installed in the nose of an Avro Lincoln heavy bomber for testing: it first flew in 1950 and appeared at the Farnborough Air Display on 10 September 1951. In total the Nomad I ran for just over 1,000 hours, and proved to be rather temperamental, but when running properly it could produce 3,000 horsepower (2,200 kW) and 320 lbf (1.4 kN) thrust. It had a specific fuel consumption (sfc) of 0.36 lb/(hp·h) (0.22 kg/(kW·h)). In contrast, a very efficient Pratt & Whitney R-1830 petrol radial engine consumes 0.49 lb/hp.h at cruise settings. However, in practice the jet engine is still preferable since it is much smaller and lighter, and operates at much higher altitudes and speeds. The jet thus consumes about the same amount of fuel for a given trip distance, due to its much shorter transit time at higher altitudes.

The prototype Nomad I is on display at the National Museum of Flight at East Fortune Airfield in Scotland.

Even before the Nomad I was running, its successor, the Nomad II (E.145) Nomad 6, had already been designed. In this version an extra stage was added to the axial compressor/supercharger, eliminating the separate centrifugal part and the intercooler. The turbine (which also received an additional stage) was now only used to drive the compressor, and feed back any excess power to the main shaft using a hydraulic clutch; the separate propeller from the turbine was deleted, just as the whole of the "afterburner" system with its valves etc. So the system was now like a combination of a mechanical supercharger, and a turbocharger without any need for bypass. The result was smaller and considerably simpler: a single engine driving a single propeller. Overall about 1,000 lb (450 kg) was taken off the weight. The wet liners of the cylinders of the Nomad I were changed for dry liners. While the Nomad II was undergoing testing, a prototype Avro Shackleton was lent to Napier as a testbed. The engine proved bulky, like the Nomad I before it, and in the meantime several dummy engines were used on the Shackleton for various tests.

A further development, the Nomad Nm.7, of 3,500 shp (2,600 kW) was announced in 1953.

By 1954 interest in the Nomad was waning, and after the only project, the Avro Type 719 Shackleton IV, based on it was cancelled, work on the engine was ended in April 1955, after an expenditure of £5.1 million. By this time civilian jets such as the Boeing 707 were nearing completion, and the Nomad was never seriously considered by any aircraft manufacturer.